Hornby Regulatory News (HRN)

HORNBY - INTERIM MANAGEMENT STATEMENT

Hornby Plc ("Hornby"), the international hobby products Group, today issues the following interim management statement relating to the period since 31 March 2014.

Business Performance

The sales performance of the Group in the period up to the end of July has been in line with Company expectations and slightly ahead of the corresponding period last year. Recent sales of Airfix and Corgi have been encouraging, the former driven by the launch of the '1/24 Hawker Typhoon MKB1' to great acclaim. Management of aged stock has been a priority in the period and good progress has been made across the brands.

There continues to be significant focus on the production processes for Hornby and Scalextric product from our supplier partners in Asia. We are working with an increased number of factories in our network and improving the capability of vendors and therefore, whilst we still foresee challenges in ongoing production, we remain confident that supplies of key products will improve over time.

In order to further strengthen our performance in Asia we are pleased to be able to announce the recent appointment of Bharat Ahir to the newly created position of Managing Director Asia. Bharat has been consulting with the Company on a part-time basis for 12 months as part of the transformation programme in the Hong Kong office. Having been based in Asia for over a decade, he brings with him a wealth of sourcing and supply chain experience, acquired in organisations such as Woolworths, Etam and his own Company 28one.

Financial Position

There has been no significant change to the financial position of the Group as at the 31 July 2014, since our year end results announcement on the 27 June 2014 and the subsequent publication of the Report and Accounts for the year ended 31 March 2014. In line with our normal seasonal trading pattern, net debt was up to £10.7m at the end of July 2014 compared to £7.4m at 30 July 2013 and £7.3m at 31 March 2014.

Operational Improvements

Plans for the migration of Hornby's UK logistics and warehousing functions to DS Logistics in Hersden, Kent in August are progressing well and the physical move is due to commence in the next few days. We expect that this facility will enable the Company to service its UK customer base more effectively over the key sales period this Christmas. We are now assessing opportunities to build upon this service and our existing freehold site.

The new Magento based websites for Airfix, Humbrol, Corgi, Scalextric and Hornby that were launched on the 4 June are performing well and have produced a significant increase in page load speed. Improved product layouts and cashier software has seen a 15% increase in average order value and a 40% increase in customer conversion rates. We are pleased to see that we have received over 100,000 page hits on our Retail Find a Stockist pages, a clear sign that we are helping to drive business into our retail channels. In the next few weeks we expect to significantly increase the range of 'Spares Product' available to consumers on the sites and to replicate the success of the Hornby Forum on the Airfix, Humbrol, Corgi and Scalextric sites.

Outlook

The pre-Christmas period will be an important factor in the overall result of the current financial year. We have a strong range of products and initial indicators of both listings and orders are encouraging. On time delivery of our product will continue to be a significant factor in performance and we are working closely with key suppliers to achieve the required volumes. With the correct volumes in play we are satisfied that our trading outlook is in line with market expectations. In the longer-term we remain confident in the strength of our brands and the opportunity to improve performance and grow profitability.

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